Lit1 Task 310.1.2-01-06
LIT1 Task 310.1.2-01-06
Part A
Sole Proprietorship -
• LIABILITY – There is no separation between the individual and the business. As the owner and operator of a sole proprietorship, all of the profit and loss is the personal responsibility of the business owner creating unlimited liability.
• INCOME TAXES – As a sole proprietor all business income or losses must be reported as personal income tax. The business itself is not taxed separately.
• LONGEVITY/CONTINUITY – The sole proprietorship is defunct once the business owner dies, or quits.
• CONTROL – The business is controlled by the single business owner. The control cannot be passed to another person.
• PROFIT RETENTION – All profits are kept by the business owner.
• LOCATION – A sole proprietor can conduct business in one or more states without any regulations.
• CONVENIENCE/BURDEN – The convenience lies in the ease of set up of the business. There are limited steps to begin a sole proprietorship. The burden lies in the lack of separation between the business and the business owner.
General Partnership -
• LIABILITY – Partners are personally liable for all of the business debts and obligations. This also includes court judgments.
• INCOME TAXES – A partnership is not a separate tax entity from the business owners. The IRS treats this as a pass through entity. This means the business does not pay any income taxes on profits; rather this is passed through to the partners.
• LONGEVITY/CONTINUITY – Typically when one partnership wants to leave the company the business is generally dissolved.
• CONTROL – Control is shared between partners.
• PROFIT RETENTION – In general partnerships profits are shared between partners.
• LOCATION – Just like sole proprietorships, general partnerships can conduct business in one or more states without any regulations.
• CONVENIENCE/BURDEN – The main advantage of a general partnership is low amount of paperwork needed for registration and its startup
Part A
Sole Proprietorship -
• LIABILITY – There is no separation between the individual and the business. As the owner and operator of a sole proprietorship, all of the profit and loss is the personal responsibility of the business owner creating unlimited liability.
• INCOME TAXES – As a sole proprietor all business income or losses must be reported as personal income tax. The business itself is not taxed separately.
• LONGEVITY/CONTINUITY – The sole proprietorship is defunct once the business owner dies, or quits.
• CONTROL – The business is controlled by the single business owner. The control cannot be passed to another person.
• PROFIT RETENTION – All profits are kept by the business owner.
• LOCATION – A sole proprietor can conduct business in one or more states without any regulations.
• CONVENIENCE/BURDEN – The convenience lies in the ease of set up of the business. There are limited steps to begin a sole proprietorship. The burden lies in the lack of separation between the business and the business owner.
General Partnership -
• LIABILITY – Partners are personally liable for all of the business debts and obligations. This also includes court judgments.
• INCOME TAXES – A partnership is not a separate tax entity from the business owners. The IRS treats this as a pass through entity. This means the business does not pay any income taxes on profits; rather this is passed through to the partners.
• LONGEVITY/CONTINUITY – Typically when one partnership wants to leave the company the business is generally dissolved.
• CONTROL – Control is shared between partners.
• PROFIT RETENTION – In general partnerships profits are shared between partners.
• LOCATION – Just like sole proprietorships, general partnerships can conduct business in one or more states without any regulations.
• CONVENIENCE/BURDEN – The main advantage of a general partnership is low amount of paperwork needed for registration and its startup